Growing FitFlop

LONDON — Marcia Kilgore transformed the beauty business — and now she’s out to do it with footwear.

In just 19 months, the serial entrepreneur has turned her latest startup, FitFlop, into the industry’s newest must-have item. Last summer, as the economy began to spiral downward, FitFlop was a bright spot for many retailers, and Kilgore expects the momentum to continue in 2009.

While she has tempered expectations amid the global economic crisis, Kilgore is confi dent the brand is well-positioned, thanks to its wellness message and moderate price point. This year, the brand is expecting sales to reach 42 million pounds, or $60 million at current exchange rates.

“[Business] may slow down a little bit because of the recession,” said Kilgore. “However, like lipstick, shoes give you a lift. And at $50, anybody can buy  FitFlops. They’re not like a pair of $700 heels. Once you put them on, you’re not taking them off.”

Kilgore is best known for founding and building Bliss into a skincare and beauty giant. (She sold a majority stake in the company to LVMH in 1999 and her remaining interest to Starwood Hotels & Resorts in 2004.) Her latest cosmetics venture, called Soap & Glory, is a new line exclusive to Target in the U.S. market.

While she is a well-known expert in the beauty biz, Kilgore readily admits she knew nothing about footwear when she launched FitFlop in June 2007. What she did know is that more consumers are craving good-for-you products. And FitFlop’s catchy slogan, “It’s the flip-flop with the gym built in,” instantly resonated with retailers and shoppers.

The brand debuted with a $49.99 sandal, Walkstar, sporting a 1.5-inch rubber sole, stripes on the upper and a distinctive circular FitFlop logo. Demand for Billow, FitFlop’s new shearling clog that landed at retail pre-Christmas, continues to outstrip supply.

FitFlop’s original claim — that it tones muscles using its patent-pending, multidensity midsole developed in conjunction with biomechanist David Cook at London’s South Bank University — was simple enough. However, word-of-mouth endorsements and customer claims of additional “miracle cure” properties (pain relief from multiple sclerosis, arthritis or scoliosis) has fueled media curiosity and boosted sales.

While critics claim there are no actual health benefits, Kilgore doesn’t seem worried. In fact, the brand is now working on several formal studies to back up its claims.

In the meantime, distribution continues to expand. FitFlop is sold in 44 countries, with the U.S. accounting for 40 percent of the business. And with a new stateside executive in place, (former Birkenstock exec Justin Orrell-Jones), Kilgore is confident that the U.S. will continue to ring up solid sales this year. Next up is the launch of Freeway, a sporty slide that is a departure from the traditional thong style. “If what everyone tells me is correct, we will do very well with that,” Kilgore said. “I wish we had [done] it sooner.”

FN: How is the economic crisis affecting your business?
It’s the survival of the fittest in a bad economy, and it’s good because it ultimately makes everybody raise his or her game. Better products will win out — things that are relevant, things that are used more. People are looking for good value, and something you wear twice that makes your feet and back hurt is not good value.

We’re lucky in that we’ve only just started our distribution and there are so many other channels we haven’t gone into yet. We are now able to open them in 2009 because our systems and supply chains are ready to handle the onslaught. I’m relatively bullish. We’ve scaled our projections back a little bit because of the recession, with an increase over last year [forecast] for 70 percent. But again, we are still quite small, so 70 percent isn’t that big of a deal now that we have systems that can ship these orders. We could have probably sold 100 percent more in 2008 if we’d only had the product and shipped it fast enough. Also, last year we tested a lot of products, including the sequin FitFlops and other girly styles. They really sold quickly, but we only ordered a couple of thousand pairs.

FN: How much did you know about the shoe industry when you started out?
Nothing. Actually, because I have what our fit technologist calls freak feet — I have incredibly wide feet and incredibly high arches — I wasn’t a big consumer of footwear. I can probably only fit into 5 percent of the shoes that are out there, so I’d given up.

FN: So you were motivated by your own needs?
The need was more about staying in shape. I had my kids and had no spare time. How could I manage to squeeze a workout into my schedule? For the first couple of years after having my first son, I’d run errands with him in a backpack until he weighed about 30 pounds. It was great, like military training. I was in extremely good shape, but then he got too heavy and I got pregnant again and was unable to carry him around. So at first, I was thinking about inventing a backpack with a fake baby.

FN: Do you worry about FitFlop being a fad?
For the first two months, we thought maybe it was a fad. Then the next year, it happened all over again, but 400 times as big and then the testimonials started coming in from people swearing they would never wear another shoe again. So I’d say no, it’s not a fad anymore. In the end, it’s about keeping it simple and never forgetting what made you successful.
FN: Are there other footwear business models you look to for inspiration?
Ugg continues to perform because people wear [the shoes]. They’re not like a pair of high heels [that are] so uncomfortable that you only wear them once and they stay in your closet. They have done a great job, and it doesn’t seem to have an end.

FN: Did Ugg inspire your new Billow boot?
It’s a furry short boot, but we didn’t really do it to be like Ugg. We did it because we were trying to come up with a warm shoe. We had so many customers saying to us, “I need something warm to wear in the winter.” We had a clog and decided on a warmer version. We call the Billow a converta-boot because it can be rolled down and worn as a clog or rolled up to be a short boot.

FN: Are more women choosing comfort over fashion today?
When women get over 35 and they have kids, they don’t care as much about how stylish they look. Many have given up on the idea of being the most stylish person out there. They want to be as stylish as possible, while still being happy. Happiness, comfort, having your legs feeling good and having energy are paramount. Now when I walk down the street and see women wearing high heels and I see what it does to the biomechanical process in their body, I don’t find it attractive. I just think, “My God, what are we doing to ourselves?”

FN: What footwear brands do you wear to dress up?
Manolo Blahnik does a great job — his shoes are comfortable. He makes it possible to have beautiful dainty shoes and feel comfortable. If I have to wear a pair of high heels, I wear Manolo. But for everyday, I live in boots. Because we haven’t done winter shoes yet, I buy Yohji Yamamoto — biker boots that are usually flat, comfortable and fashioned from beautifully soft leather. I’ll wear a pair of them for about five years, until they’re literally falling apart, and then I’ll buy another.

FN: You’re a newcomer to footwear. What’s your overall impression of the industry?
There seems to be an old-boys’ shoe network. And a lot of shoe companies originated 30, 50 years ago, and the world has changed quite a bit since then. So while you can look at the model of old shoe companies, they don’t necessarily resonate with today’s faster-moving society.

FN: Have you found similarities between the skincare business and shoes?
I was thinking about that this morning — it’s very similar. We’re very lucky because we’re a footwear company that offers a product with a specific benefit and a message: “Get a workout while you walk. It’s a flip-flop with a gym built in.” So it’s quite easy to communicate those benefits to the customer — we say it on the hangtag. It’s very similar to cosmetics, in that if you don’t make the unique benefits and selling position very clear, you probably won’t sell the product.

FN: How big of a role did your hangtags play in capturing the consumer’s attention?
Together, all those hangtags were a magical combination, because they were what the customer saw first. We had shoes on plastic hangers with messy hangtags. It caught people’s eye at retail. Our very first hangtag just hung from the product — it was a bit of a mess. In essence it said, “These things firm your bum muscles,” and underneath was another hangtag about how it worked. Underneath that was a warning saying to be careful using FitFlops at first and get used to them gradually. It’s funny because marketing people and art directors typically want to simplify product and put nothing on it.

FN: Some people have questioned the health benefits of FitFlops. How do you answer them?
The testimonials we get are so widespread in terms of the benefits that people have experienced. While we made the product to tone the legs, we probably have as many people writing to tell us FitFlops have been responsible for miraculously curing ailments. For example, the original design wasn’t to cure dizziness or unexplained vertigo, but we get lots of testimonials that tell us that it happens. We’ve also had at least 10 people write in and say it cures leg edema, osteoporosis and scoliosis. A woman with a reconstructed clubfoot wrote to tell us that it was never as strong as her other foot. Then she heard about FitFlops, bought a pair and now her feet are pretty much equally strong. Britain’s leading podiatrists now recommend them to their customers. To me it’s really obvious — in a normal shoe where the foot’s bound and the sole is rigid, the cuneiform bones in the middle of your foot aren’t going to move. But they’re made to move, and when they’re allowed to, you have blood flow and lymphatic flow, which cuts down on inflammation and pain.

FN: Are you trying to prove these claims?
Yes. The University of Salford [which has a podiatry clinic attached that services all of Manchester] does independent studies for us. And we now have a research project with the university and a full-time Ph.D. student studying why FitFlops are doing all these things. For example, the studies will take 100 people with scoliosis, give them FitFlops and see how long it will take for them to have no pain. I now feel it’s our duty to get the word out to those people who are spending, say, $500 on a custom orthotic who could just get a pair of FitFlops.

FN: Do you plan to do more advertising to get the word out?
I’m very excited about the campaign we’ve shot with legendary photographer Steve Hiett. As part of that, we’re planning an outdoor advertising campaign for late spring ’09 in the U.K. and U.S. The images feature models with beautifully toned, athletic legs going about various activities (walking their dogs, vacuuming a floor, exercising on the beach), all wearing FitFlops. Magazine advertising is not something we are looking at right now because of the expense, but it’s absolutely something we would not rule out.

FN: You made your first foray into the upscale market by producing a special item for Net-a-porter.com and Kirna Zabête. Is this an area you want to expand in?
Not much. We sold a couple of thousand pairs of our crazy gladiators last summer, so it wasn’t bad. But mainly we do it for fun and for press, and so our Italian designer can go off and do something fun like that. Once a season, he can get inspired and creative, which I think is important. We have some concepts for spring ’09 for this market, but we have yet to sign off on any of them.


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